UNLV Accounting Competency Ultimate
Exam
**Question 1.** Which journal entry records the purchase of equipment for $12,000 cash?
A) Debit Equipment $12,000; Credit Cash $12,000
B) Debit Cash $12,000; Credit Equipment $12,000
C) Debit Equipment $12,000; Credit Accounts Payable $12,000
D) Debit Notes Payable $12,000; Credit Equipment $12,000
Answer: A
Explanation: Purchasing equipment with cash increases an asset (Equipment) and decreases another
asset (Cash), both recorded as debits and credits respectively.
**Question 2.** When a company issues $50,000 of common stock at a price above par, the excess over
par is recorded in which account?
A) Common Stock
B) Additional Paid-In Capital (APIC)
C) Retained Earnings
D) Treasury Stock
Answer: B
Explanation: The amount received above the par value of the shares is credited to APIC.
**Question 3.** A firm borrows $30,000 by signing a 5-year note payable at 6% annual interest. Which
entry records the borrowing?
A) Debit Cash $30,000; Credit Notes Payable $30,000
B) Debit Notes Payable $30,000; Credit Cash $30,000
C) Debit Cash $30,000; Credit Interest Payable $30,000
D) Debit Cash $30,000; Credit Common Stock $30,000
Answer: A
Explanation: Cash received increases assets; the liability (Notes Payable) increases on the credit side.
**Question 4.** Revenue earned on account is initially recorded by which combination?
,UNLV Accounting Competency Ultimate
Exam
A) Debit Cash; Credit Revenue
B) Debit Accounts Receivable; Credit Revenue
C) Debit Revenue; Credit Accounts Receivable
D) Debit Unearned Revenue; Credit Revenue
Answer: B
Explanation: When revenue is earned on credit, Accounts Receivable (asset) is debited and Revenue
(equity) is credited.
**Question 5.** An expense paid in cash for utilities of $500 is recorded by:
A) Debit Utilities Expense $500; Credit Cash $500
B) Debit Cash $500; Credit Utilities Expense $500
C) Debit Utilities Expense $500; Credit Accounts Payable $500
D) Debit Accounts Payable $500; Credit Utilities Expense $500
Answer: A
Explanation: Paying cash reduces Cash (credit) and recognizes the expense (debit).
**Question 6.** The declaration of a $2 per share cash dividend on 10,000 shares results in which
journal entry?
A) Debit Dividends Payable $20,000; Credit Retained Earnings $20,000
B) Debit Retained Earnings $20,000; Credit Dividends Payable $20,000
C) Debit Cash $20,000; Credit Dividends Payable $20,000
D) Debit Retained Earnings $20,000; Credit Cash $20,000
Answer: B
Explanation: Declaring a dividend reduces retained earnings (debit) and creates a liability (Dividends
Payable, credit).
**Question 7.** Prepaid insurance of $6,000 covering 12 months is initially recorded by:
A) Debit Insurance Expense $6,000; Credit Cash $6,000
,UNLV Accounting Competency Ultimate
Exam
B) Debit Prepaid Insurance $6,000; Credit Cash $6,000
C) Debit Cash $6,000; Credit Prepaid Insurance $6,000
D) Debit Prepaid Insurance $6,000; Credit Insurance Expense $6,000
Answer: B
Explanation: Payment for future coverage creates an asset (Prepaid Insurance) and reduces cash.
**Question 8.** When $1,500 of unearned revenue is earned, the adjusting entry is:
A) Debit Unearned Revenue $1,500; Credit Service Revenue $1,500
B) Debit Service Revenue $1,500; Credit Unearned Revenue $1,500
C) Debit Cash $1,500; Credit Service Revenue $1,500
D) Debit Service Revenue $1,500; Credit Cash $1,500
Answer: A
Explanation: Earned portion is removed from liability (Unearned Revenue) and recognized as revenue.
**Question 9.** At year-end, salaries of $4,200 incurred but not yet paid are recorded by:
A) Debit Salaries Expense $4,200; Credit Salaries Payable $4,200
B) Debit Salaries Payable $4,200; Credit Salaries Expense $4,200
C) Debit Cash $4,200; Credit Salaries Expense $4,200
D) Debit Salaries Expense $4,200; Credit Cash $4,200
Answer: A
Explanation: Accrued expense increases expense (debit) and creates a liability (Salaries Payable, credit).
**Question 10.** Interest accrued on a $10,000 note payable at 8% for one month is:
A) $66.67; Debit Interest Expense, Credit Interest Payable
B) $800; Debit Interest Expense, Credit Cash
C) $80; Debit Interest Payable, Credit Interest Expense
D) $800; Debit Interest Payable, Credit Interest Expense
, UNLV Accounting Competency Ultimate
Exam
Answer: A
Explanation: Monthly interest = 10,000 × 0.08 ÷ 12 = $66.67; record as expense and payable.
**Question 11.** The adjusting entry for one-month’s consumption of a $3,600 prepaid rent (12-month
policy) is:
A) Debit Rent Expense $300; Credit Prepaid Rent $300
B) Debit Prepaid Rent $300; Credit Rent Expense $300
C) Debit Rent Expense $300; Credit Cash $300
D) Debit Cash $300; Credit Rent Expense $300
Answer: A
Explanation: Allocate one-twelfth of the prepaid amount to expense.
**Question 12.** Straight-line depreciation on equipment costing $24,000 with a $4,000 salvage value
and 8-year life results in annual depreciation of:
A) $2,500
B) $3,000
C) $2,000
D) $3,500
Answer: B
Explanation: (Cost – Salvage) ÷ Life = (24,000-4,000)/8 = $2,500? Wait compute: 20,000/8 = $2,500.
Actually answer A. Correction: Answer A.
Explanation: Straight-line depreciation = (24,000-4,000)/8 = $2,500 per year.
**Question 13.** If a $500 equipment purchase was mistakenly debited to Supplies, the correcting
entry is:
A) Debit Equipment $500; Credit Supplies $500
B) Debit Supplies $500; Credit Equipment $500
C) Debit Equipment $500; Credit Cash $500
D) Debit Cash $500; Credit Equipment $500
Exam
**Question 1.** Which journal entry records the purchase of equipment for $12,000 cash?
A) Debit Equipment $12,000; Credit Cash $12,000
B) Debit Cash $12,000; Credit Equipment $12,000
C) Debit Equipment $12,000; Credit Accounts Payable $12,000
D) Debit Notes Payable $12,000; Credit Equipment $12,000
Answer: A
Explanation: Purchasing equipment with cash increases an asset (Equipment) and decreases another
asset (Cash), both recorded as debits and credits respectively.
**Question 2.** When a company issues $50,000 of common stock at a price above par, the excess over
par is recorded in which account?
A) Common Stock
B) Additional Paid-In Capital (APIC)
C) Retained Earnings
D) Treasury Stock
Answer: B
Explanation: The amount received above the par value of the shares is credited to APIC.
**Question 3.** A firm borrows $30,000 by signing a 5-year note payable at 6% annual interest. Which
entry records the borrowing?
A) Debit Cash $30,000; Credit Notes Payable $30,000
B) Debit Notes Payable $30,000; Credit Cash $30,000
C) Debit Cash $30,000; Credit Interest Payable $30,000
D) Debit Cash $30,000; Credit Common Stock $30,000
Answer: A
Explanation: Cash received increases assets; the liability (Notes Payable) increases on the credit side.
**Question 4.** Revenue earned on account is initially recorded by which combination?
,UNLV Accounting Competency Ultimate
Exam
A) Debit Cash; Credit Revenue
B) Debit Accounts Receivable; Credit Revenue
C) Debit Revenue; Credit Accounts Receivable
D) Debit Unearned Revenue; Credit Revenue
Answer: B
Explanation: When revenue is earned on credit, Accounts Receivable (asset) is debited and Revenue
(equity) is credited.
**Question 5.** An expense paid in cash for utilities of $500 is recorded by:
A) Debit Utilities Expense $500; Credit Cash $500
B) Debit Cash $500; Credit Utilities Expense $500
C) Debit Utilities Expense $500; Credit Accounts Payable $500
D) Debit Accounts Payable $500; Credit Utilities Expense $500
Answer: A
Explanation: Paying cash reduces Cash (credit) and recognizes the expense (debit).
**Question 6.** The declaration of a $2 per share cash dividend on 10,000 shares results in which
journal entry?
A) Debit Dividends Payable $20,000; Credit Retained Earnings $20,000
B) Debit Retained Earnings $20,000; Credit Dividends Payable $20,000
C) Debit Cash $20,000; Credit Dividends Payable $20,000
D) Debit Retained Earnings $20,000; Credit Cash $20,000
Answer: B
Explanation: Declaring a dividend reduces retained earnings (debit) and creates a liability (Dividends
Payable, credit).
**Question 7.** Prepaid insurance of $6,000 covering 12 months is initially recorded by:
A) Debit Insurance Expense $6,000; Credit Cash $6,000
,UNLV Accounting Competency Ultimate
Exam
B) Debit Prepaid Insurance $6,000; Credit Cash $6,000
C) Debit Cash $6,000; Credit Prepaid Insurance $6,000
D) Debit Prepaid Insurance $6,000; Credit Insurance Expense $6,000
Answer: B
Explanation: Payment for future coverage creates an asset (Prepaid Insurance) and reduces cash.
**Question 8.** When $1,500 of unearned revenue is earned, the adjusting entry is:
A) Debit Unearned Revenue $1,500; Credit Service Revenue $1,500
B) Debit Service Revenue $1,500; Credit Unearned Revenue $1,500
C) Debit Cash $1,500; Credit Service Revenue $1,500
D) Debit Service Revenue $1,500; Credit Cash $1,500
Answer: A
Explanation: Earned portion is removed from liability (Unearned Revenue) and recognized as revenue.
**Question 9.** At year-end, salaries of $4,200 incurred but not yet paid are recorded by:
A) Debit Salaries Expense $4,200; Credit Salaries Payable $4,200
B) Debit Salaries Payable $4,200; Credit Salaries Expense $4,200
C) Debit Cash $4,200; Credit Salaries Expense $4,200
D) Debit Salaries Expense $4,200; Credit Cash $4,200
Answer: A
Explanation: Accrued expense increases expense (debit) and creates a liability (Salaries Payable, credit).
**Question 10.** Interest accrued on a $10,000 note payable at 8% for one month is:
A) $66.67; Debit Interest Expense, Credit Interest Payable
B) $800; Debit Interest Expense, Credit Cash
C) $80; Debit Interest Payable, Credit Interest Expense
D) $800; Debit Interest Payable, Credit Interest Expense
, UNLV Accounting Competency Ultimate
Exam
Answer: A
Explanation: Monthly interest = 10,000 × 0.08 ÷ 12 = $66.67; record as expense and payable.
**Question 11.** The adjusting entry for one-month’s consumption of a $3,600 prepaid rent (12-month
policy) is:
A) Debit Rent Expense $300; Credit Prepaid Rent $300
B) Debit Prepaid Rent $300; Credit Rent Expense $300
C) Debit Rent Expense $300; Credit Cash $300
D) Debit Cash $300; Credit Rent Expense $300
Answer: A
Explanation: Allocate one-twelfth of the prepaid amount to expense.
**Question 12.** Straight-line depreciation on equipment costing $24,000 with a $4,000 salvage value
and 8-year life results in annual depreciation of:
A) $2,500
B) $3,000
C) $2,000
D) $3,500
Answer: B
Explanation: (Cost – Salvage) ÷ Life = (24,000-4,000)/8 = $2,500? Wait compute: 20,000/8 = $2,500.
Actually answer A. Correction: Answer A.
Explanation: Straight-line depreciation = (24,000-4,000)/8 = $2,500 per year.
**Question 13.** If a $500 equipment purchase was mistakenly debited to Supplies, the correcting
entry is:
A) Debit Equipment $500; Credit Supplies $500
B) Debit Supplies $500; Credit Equipment $500
C) Debit Equipment $500; Credit Cash $500
D) Debit Cash $500; Credit Equipment $500
